Nifty Valuations Turn Attractive as India's Growth Defies Crude Shock

The recent market corrections created a favourable valuation backdrop, with the Nifty trading at a 5.6 per cent discount to its five-year average PE, enhancing the medium-term risk-reward for investors, the report from PL Asset Management, the asset management arm of PL Capital Group said.

Sectoral winners included metals, energy, pharma, industrials, autos and public sector bank financials, while IT underperformed, it said, adding that gold remains a key allocation hedge.

"While near-term volatility may remain high, such corrections typically reset markets and create attractive entry opportunities for long-term investors through calibrated value buying," the report noted.

The firm forecasts the India-US tariff reduction, progress on the India-EU FTA, and the government's Rs 12.2 lakh crore infrastructure push under Budget 2026 to boost export competitiveness, unlock new growth avenues, and accelerate the domestic capex cycle, reinforcing India's medium-term growth outlook.

Indian equities have shown resilience due to domestic fundamentals, robust liquidity and institutional participation but face risks from global tensions that could erode fiscal and growth momentum, it added.

"Rising crude and gas disruptions are likely to keep inflation firm, interest rates higher for longer, and pressure fiscal deficits and currency stability, with the rupee remaining vulnerable," said Siddharth Vora, Head - Quant Investment Strategies & Fund Manager, PL Asset Management.

While valuations may appear attractive, they risk becoming expensive if earnings are impacted by higher input, energy, logistics, and financing costs, Vora added.

The analyst called for sharp sector selection and disciplined risk and cash management, with a preference for large caps and factors such as value, quality, and low volatility.

- IANS